TREASURY

UK Covered Bonds Regime

Edward Balls: The Treasury has been working closely with the Financial Services Authority and industry on the development of a UK covered bonds regime. UK covered bonds are based on well-accepted market standards and benefit from a high level of legal certainty. The object of Treasury and FSA work is to ensure compliance with the Undertakings for Collective Investment in Transferable Securities ('UCITS') Directive. To this end, the Treasury intends to consult on secondary legislation at the earliest possible opportunity, with implementation by the end of 2007, earlier if possible. Such compliance creates a level playing field for UK covered bonds in the EU and delivers the best possible risk weight for UK covered bonds under the Capital Requirements Directive. Covered bonds have the benefit of:
	being a highly liquid, medium to long dated and cost effective debt instrument;
	providing a highly effective means of managing long-term liquidity risk for investors and issuers and an additional tool to manage interest rate risk;
	in macro-economy terms, greater choice and efficiency in investment markets; and
	giving consumers the benefit of the greater efficiency of the funding of the mortgage market.

COMMUNITIES AND LOCAL GOVERNMENT

Council Tax Capping

Phil Woolas: On 27 March I made a statement to the House on council tax capping. In this, I set out the action that the Government proposed to take, under the Local Government Finance Act 1992, against two local authorities which had set excessive budgets for 2006-07 according to the principles that I announced, 27 March 2006, Official Report, columns 567-69. Those two authorities were York city council and Medway borough council, which were both "designated", with a view to capping them in year. I am making a statement today about the decisions on both cases.
	York and Medway were given 21 days in which to challenge the maximum budgets the Government proposed to set them in 2006-07, and to provide the information we had requested. Both authorities challenged their proposed maximum budgets and I met delegations from each of them to hear their cases in person.
	The vast majority of authorities now appreciate the seriousness with which the Government view the need to protect council tax payers against excessive increases. The average band D council tax increase in England for 2006-07, without the council-tax element of the Olympics, is 4.2 per cent. (with the Olympics, it is 4.5 per cent.). Over 99 per cent., of authorities have responded well to our message and have not set excessive budgets. Despite the fact that the principles which the Secretary of State used to determine excessiveness were tighter this year than last, only two authorities exceeded them by more than trivial amounts.
	I can now announce how my right hon. Friend, the Secretary of State for Communities and Local Government, intends to proceed, having carefully considered the representations York and Medway have made, both orally and in writing, and having taken into account all relevant information. These decisions have been based not only on the individual cases of these particular councils, but also on the need, as a matter of public policy, for authorities to restrain the demands on their council-tax payers.
	In putting forward their challenges, neither authority has, in the Secretary of State's view, presented strong arguments as to why an excessive increase was necessary, or demonstrated that the pressures identified acted disproportionately upon them to any significant extent compared to other authorities. We intend therefore to take action in both cases.
	After careful consideration, we have decided to cancel the designation of the two authorities and to "nominate" them instead with a proposed notional budget for each authority at the level of the maximum budget originally proposed when they were designated. For York city council, the proposed notional budget for 2006-07 is therefore £97,484,000 and for Medway Borough Council £148,101,000.
	By nominating the authorities in this way, the councils will be able to avoid re-billing for this year, but it reduces their capacity to increase council tax in the subsequent year and beyond. The notional budgets which we propose setting will be used in future capping comparisons. The authorities will have their budget increases next year measured against the notional budgets rather than their actual, higher budgets. This will provide their council-tax payers with extra protection next year.
	We are writing to both authorities today informing them of these decisions. Each authority will have 21 days from receipt of the notification of nomination in which to challenge its proposed notional budget. The Secretary of State will, of course, consider any challenge that they make fully and carefully.
	The Government are continuing to deliver on their promise to take action against excessive council tax increases. By 2007-08, Government grant for local services will have increased by more than the rate of inflation for 10 years in succession. That represents an increase of 39 per cent., in real terms since 1997.
	The Government have already made it clear that they expect an average council tax increase in England of less than 5 per cent., in 2007-08. Authorities should remain in no doubt that the Government will not hesitate to use their capping powers to deal with excessive increases in future years, including requiring them to rebill, if this proves necessary.

DEFENCE

Support Vehicle Programme

Adam Ingram: I am pleased to announce that following the successful completion of an internal review the Ministry of Defence has decided to take up an option with MAN ERF UK Ltd. to buy a further 2,077 cargo vehicles as part of the support vehicle contract which we announced last year.
	The award of this option, which brings the value of the programme to £1.3 billion, will see the delivery of further tranche of modern, more effective and more efficient fleet of trucks and trailers—a vital support capability—to our armed forces. This is in addition to the 5,000 vehicles we announced we were buying last year—the largest vehicle buy made by the MOD in over half a century.
	The support vehicle programme includes a contractor logistic support package which will lead to a long term partnering arrangement consistent with the DIS published last December. Importantly the vehicles are specially designed so they can be quickly fitted with 'armour kits', which will help protect drivers and crew from blast and small arms attacks.
	The contract secures some 400 jobs in the automotive sector across the UK, and is an excellent deal for both UK industry and the British armed forces.

ENVIRONMENT FOOD AND RURAL AFFAIRS

Agriculture and Fisheries Council

David Miliband: I represented the United Kingdom at the Agriculture and Fisheries Council meeting in Luxembourg on 19 June 2006.
	The Council adopted a proposal confirming the overall rural development budget for 2007-13, and the annual breakdown including the minimum amount to be concentrated in regions eligible under the convergence objective. I supported the Council decision while expressing the UK's disappointment at the Commission's allocation method which based future funding on historic records.
	The Council took note of an update from the Commission on the latest state of play on the WTO agricultural negotiations and held an exchange of views. The Commissioner said that the EU was looking for an outcome that would be manageable for European farming and that the EU offer from last October still stands. I said that getting a deal was in the interest of EU citizens and stressed the importance of unity to achieving a successful outcome.
	The Council took note of a presentation by the Agriculture Commissioner of the proposed EU forest action plan and held its first exchange of views. The plan is designed to improve implementation of the EU's existing forest strategy. Finland would aim for Council conclusions on the subject during its upcoming presidency.
	The Council held a public debate on the Commission's animal welfare action plan. I stressed the importance of a strategic framework for both the industry and consumers and urged the Commission not to view legislation as the only option to raising welfare standards but to consider other ways as well, such as codes of practice and assurance schemes.
	The Council held a policy debate on the presidency's work plan on the welfare of chickens reared for meat production, aiming to tackle outstanding issues on the Commission's proposal. I called for a firm commitment to the establishment of a maximum stocking density of 38 kg per square metre within a specified timetable to ensure a level playing field across the EU for producers and achieve real welfare improvements. The presidency said that further work would be undertaken by the incoming Finnish presidency.
	Under any other business, the Council took note of the presidency conclusions following the May Informal Agriculture Council discussions, on "Land, Life and the Future of European Farmers".
	The Council also took note of an update on avian influenza by the Commissioner for Health and Consumer Protection and of the written information provided by the Austrian presidency on the sixth UN forum on forests.
	The Czech Republic called on member states to support the UN Universal Declaration on Animal Welfare which had been drawn up by a five-nation Government Steering Committee (Costa Rica, Kenya, Czech Republic, India, and the Philippines.).
	Latvia, supported by the Netherlands, queried an element of the Commission's sugar reform implementation scheme which would require sugar companies to pay securities in order to access the restructuring scheme. The Commission pointed out that the rules enabled member states to make payments in advance and for securities to be released gradually as measures in the plan were carried out.

HEALTH

Informal Meeting of EU Health Ministers

Rosie Winterton: The informal meeting of EU Health Ministers took place on 25-26 April in Vienna. I represented the UK. Items on the agenda were; Type 2 Diabetes; Pandemic Influenza Preparedness; and Women's Health.
	On Type 2 Diabetes, there was a general discussion covering prevention and links to wider health determinants (such as diet and physical activity) and approaches to disease management, including national diabetes plans. Member states outlined their experiences in developing and implementing diabetes policies at national level, and in wider health promotion policies.
	On pandemic preparedness, there was a discussion on the suggested development of a proposal on an EU stockpile of antivirals.
	On Women's Health, there was a further general discussion on the need to the need to take gender differences into account in healthcare, including research. The Commission outlined their plans to produce a report on women's health in the EU for publication during 2007.

European Court of Human Rights (Bournewood Judgment)

Rosie Winterton: I should like to set out the Government's proposals for ensuring that the law for England and Wales on the treatment and care of people suffering from a disorder or disability of mind, who lack capacity and who need to be deprived of liberty, is compliant with the European convention on human rights. Our proposals will strengthen the rights of patients and those in care, as well as ensuring compliance with the European convention on human rights (ECHR).
	People who suffer from a disorder or disability of the mind—such as dementia or autism—and who lack the mental capacity to consent should be cared for in the least restrictive regime possible. In some cases, members of this vulnerable group need to be deprived of their liberty for treatment or care because this is necessary in their best interests in order to protect them from harm.
	The proposals are in response to the 2004 European Court of Human Rights judgment involving an autistic man who lacked the capacity to consent and who was kept at Bournewood hospital by doctors against the wishes of his carers. The court found that he had been deprived of his liberty unlawfully, and the Department of Health committed to introducing new legislation to close the "Bournewood gap".
	In order to inform our response I published a consultation document in March last year that invited comments on options for closing the "Bournewood" gap. I am grateful to all those individuals and organisations who responded. Those who commented on the document were broadly in favour of the Government's proposals.
	I am today publishing a report on the outcome of the public consultation and a copy has been placed in the Library.
	People likely to be affected by the Bournewood proposals are mainly those with significant learning disabilities, or elderly people suffering from dementia, but include a minority of others who have suffered for example a brain injury. The proposals will apply to those in hospitals or care homes, whether placed under public or private arrangements.
	Key features of our proposals are:
	hospitals and care homes will have a duty to identify anyone at risk of deprivation of liberty and, if they do not consider that a less restrictive regime is possible, request an authorisation from the supervisory body;
	the supervisory body would be the local authority in the case of a care home or, in the case of a hospital, the PCT or in Wales the National Assembly for Wales;
	it will be unlawful for a hospital or care home to deprive a person of liberty without obtaining an authorisation;
	all involved must act in the best interests of the person concerned and in the least restrictive manner;
	the supervisory body will commission assessments including an independent "best interests" assessment which will look at whether the deprivation of liberty is necessary in the person's best interests;
	the best interests assessor, for example a social worker, will set the period for review in each case. This must not be longer than 12 months but we expect it to be shorter in many cases;
	family, friends and carers will be consulted as part of the best interests assessment and, if a person is unbefriended, an Independent Mental Capacity Advocate appointed;
	the supervisory body will only grant an authorisation if all the assessments recommend it;
	authorisation should be obtained in advance, except in circumstances where it is thought to be urgent, in which case authorisation should be obtained within seven days of the start of the deprivation of liberty;
	every person detained will have someone appointed to represent their interests who is independent of the supervisory body and the hospital or care home. This may be a family member, a friend or an advocate;
	managers of the hospital or care home will have a duty to monitor the person's circumstances because a change may require them to apply to the supervisory body for the authorisation to be reviewed;
	a review can also be triggered at any time by the person concerned or their representative;
	it will be easier to challenge deprivation of liberty. The person concerned or their representative, will have right of appeal at any time to the Court of Protection;
	if mental health legislation could be used instead, the new procedure will not be able to be used to admit or keep people in hospital for treatment for mental disorder if it is reasonably believed that the person concerned objects to detention for the purposes of such treatment or would object if they were in a position to do so.
	We believe that these proposals will ensure compliance with the European convention on human rights and strengthen the safeguards for those who lack capacity. Society is judged on how it treats its most vulnerable, and it is imperative that we have robust legal safeguards in place to ensure that those people who lack capacity are properly protected. The provisions will be introduced into the Mental Capacity Act 2005 through a Bill that will also amend the Mental Health Act 1983.

HOME DEPARTMENT

Deportation and Removal of Foreign Nationals

John Reid: Following my corrected written statement of 25 May I asked my Department to recheck all the figures provided to the House in my statement of the 23 May, Official Report, column 77WS.
	The director general of the immigration and nationality directorate subsequently set out her approach to this exercise in her evidence to the Home Affairs Select Committee on the 6 June and undertook to provide the most accurate data available by the end of June.
	The director general has today written to the Home Affairs Select Committee accordingly and I am placing a copy of her letter in the House Library.

Zahid Mubarek Inquiry

John Reid: The Government are today publishing the report of the inquiry into the circumstances surrounding the death of Zahid Mubarek at Feltham Young Offender Institution which was announced by my predecessor, my right hon. Friend the Member for Sheffield Brightside (Mr. Blunkett), on 29 April 2004. I wish to express my gratitude to the hon. Mr. Justice Keith, his advisers, and the inquiry team for their comprehensive examination of the important issues which arise in this case.
	Zahid Mubarek was killed, completely without provocation, on 21 March 2000 by his cell-mate, Robert Stewart, who was a known racist. The then Director General of the Prison Service wrote immediately to Mr. Mubarek's family to acknowledge that the service had not protected him as it should have done and to offer an unreserved apology. I would like to take this opportunity to offer my own sympathies to the family, for whom this will have been a particularly traumatic time.
	There have since then been a number of inquiries into the circumstances surrounding this appalling case from which the Prison Service has already learned much. The inquiry by Mr. Justice Keith is however the most thorough examination which has been carried out and adds much to our knowledge of the background to this murder.
	I welcome the report's recognition that much progress has been made by the Prison Service in the last six years to address the problems which may have contributed to Zahid Mubarek's murder. In particular I am pleased to note that the report finds that the allegations that prison officers maliciously placed ethnic minority prisoners in cells with known racists are not substantiated.
	I have placed on the Home Office's website a preliminary response to all 88 recommendations. It shows that the Government are already able to agree, at least in principle, to 50 of these. The responses to those which relate to prison practice cover only directly managed establishments at this stage. The rest will be considered both urgently and carefully, and I will make a full response to each of the recommendations within two months.

DUCHY OF LANCASTER

Royal Family and Ministerial Air Travel

Hilary Armstrong: I am today announcing the Government's response to Sir Peter Gershon's independent review of Royal Family and Ministerial air travel.
	Sir Peter's independent report highlights the need for significant improvements in the security, reliability and value for money of the current arrangements for Royal Family and Ministerial air travel. In particular, Sir Peter has concluded that:
	Despite the dedication and commitment of RAF personnel, 32 (The Royal) Squadron is unable to meet the level of demand for VIP travel placed upon it by the Royal Family and Ministers. The range and capacity of the Squadron's aircraft are also insufficient to fully meet the requirement for VIP air travel. This is no criticism of the RAF, the primary role of 32 (The Royal) Squadron is operational and the new arrangements recommended by Sir Peter will enable them to focus entirely on defence needs.
	The overall availability of 32 (The Royal) Squadron in recent years has been in the order of 60-70 per cent. and, owing to technical problems or operational priorities, around 10 per cent. of VIP bookings have been either declined or subsequently cancelled.
	The resulting need to charter an aircraft, sometimes at short notice, has failed to deliver value for money and the charter market has not always been able to provide a suitable aircraft with appropriate livery. For instance, the Prime Minister recently arrived at an EU Council meeting onboard an aircraft with Austrian livery. There have also been instances where aircraft have been used which have been unable to reach a destination without an unplanned refuelling stop or where the age of the aircraft has contributed to a mechanical failure, as was the case when the Prime Minister's return flight from South Africa earlier this year aboard a 1970 DCS was dramatically aborted on take-off due to an engine problem.
	The regular and growing use of chartered fixed wing aircraft has introduced undesirable security risks to members of the Royal Family and Government Ministers.
	Sir Peter has recommended that the Government establish a new air service based on two dedicated, second hand, fixed-wing aircraft. He has made a compelling case for change and the Government accept his report in full.
	With the agreement of the Palace, the Department for Transport will now be taking the project forward. This will lead to competitive proposals being sought from industry in the months ahead. It is anticipated that one of the aircraft included in the improved service will be a second hand airliner with the capacity to seat up to 70 passengers and the other a small second hand aircraft with the capacity to seat up to 15 passengers. Both aircraft will contain basic, fit-for-purpose interiors to allow the Royal Family and Government to undertake work while en-route and will contain secure communications, which will address the concerns raised in the Intelligence and Security Committee's 2002-03 Annual Report which commented that expenditure in this area is justified.
	It is anticipated that the new service will commence between the end of 2007 and early 2008. The new arrangements will result in 32 (The Royal) Squadron aircraft no longer being used for routine non-defence related flights. The squadron will, however, continue to be used to transport VIPs into operational theatres where necessary and for the routine travel of senior defence personnel, including MOD Ministers.
	Sir Peter has advised that the new arrangements will deliver a safe, reliable and secure air travel service to the Royal Family and Government and good value for money to the taxpayer. The new arrangements will not increase the planned levels of public expenditure as the estimated additional annual cost of £2.7 million will be met from a £1.5 million contribution from the Ministry of Defence, recognising 32 (The Royal) Squadron's greater future deployability, and the remaining £1.2 million will be absorbed by those using the new service.
	Copies of Sir Peter's report have been placed in the Library and are available for Members in the Vote Office.

PRIME MINISTER

Intelligence and Security Committee (Annual Report)

Tony Blair: I am grateful to the Intelligence and Security Committee for its valuable work and its latest annual report. Following consultation with the Committee over matters that could not be published without prejudicing the discharge of the function and operation of the intelligence and security agencies, I have laid the report before the House today. Copies will also be placed in the Libraries of both Houses.

Ministerial Committees of the Cabinet (MISC 13)

Tony Blair: On 25 May I published the current list of Cabinet Committees, their full membership, and terms of reference.
	I have decided that it would be more appropriate for MISC 13 to be called the Ministerial Committee on Animal Rights Extremism, and not, as listed previously, the Ministerial Committee on Animal Rights Activists. This is to reflect more closely the Committee's terms of reference.
	An updated list has been placed in the Libraries of both Houses. Details have also been updated on the Cabinet Office website.

TRADE AND INDUSTRY

EU Torture Regulation

Malcolm Wicks: A consultation document and Regulatory Impact Assessment (RIA) on changes needed to secondary legislation to implement provisions of Council Regulation (EC) No. 1236/2005(1 )concerning trade in goods which could be used for capital punishment, torture or other cruel, inhuman or degrading treatment or punishment was published on 2 November 2005 and the consultation period ended on 31 January 2006. The EC Regulation 1236/2005 ("the Regulation") enters into force on 30 July 2006. The adoption of the Regulation represents a positive step forward for Europe and demonstrates the commitment of all EU Member States to introduce controls on the trade in this category of goods, following the lead set by the UK in 1997.
	The Regulation prohibits the import, export and transhipment of specified goods to non-EU states, and the provision of technical assistance. The export (etc) of other specified goods will be controlled by means of the export licensing system operated by DTI.
	My Department has given careful consideration to the comments made in response to the public consultation. A summary of the issues raised and the Government's response has been deposited in the House of Commons Library and is also available on the DTI website at http://www.dti.gov.uk/europeandtrade/strategic-export-control/index .html.
	The Regulation is directly applicable in the UK. However some changes to UK law are required to ensure a good fit between the Regulation and the existing legal framework and to provide for licensing, penalties and enforcement. The changes are described in more detail in the note I have deposited in the House. An amending Order under the Export Control Act 2002 will be laid before Parliament, to come into force on 30 July 2006 at the same time as the Regulation.
	The controls introduced by the Regulation largely mirror those already in place in UK legislation. Where there is any difference, the Government have aimed when implementing the Regulation to maintain the current level of controls where it is possible to do so consistent with Community law. We have also extended UK trade controls (on trafficking and brokering) to all the goods now controlled by the Regulation including ones not previously controlled in the UK. The Regulation will introduce controls for the first time on some items such as gallows and thumbscrews. Where possible, controls on intra-EC transfers will be maintained.
	Concerning changes to the scope of goods controlled by the Regulation, the Government will work with EU partners on possible future amendments regarding matters not covered by the Regulation. The consultation was concerned with implementation of the Regulation as adopted in Brussels rather than with a review of controls in this area per se. The Government have already said that they intend in 2007 to carry out a wider review of the export controls introduced in 2004 and will in that context welcome views on the scope of controls on equipment used for torture or internal repression. That consultation can consider whether and how to control effectively other items which are difficult to define with precision in legislation.

TRANSPORT

Eddington Study

Douglas Alexander: Sir Rod Eddington is currently conducting a transport study looking at the long-term impact of transport decisions on the UK's productivity, stability and growth, within the context of government's commitment to sustainable development.
	Sir Rod recently updated the Chancellor and me on progress with his study. This work is a major undertaking, and Sir Rod advised that he would like to undertake further work on some substantive matters before submitting his advice. He is therefore working to finalise his advice for publication around the time of the 2006 pre-Budget report.

WORK AND PENSIONS

Benefit Fraud Inspectorate Reports

James Plaskitt: On behalf of my right hon. Friend the Secretary of State for Work and Pensions, the BFI inspection reports on the following councils were published today: East Lothian Council, Ellesmere Port and Neston Borough Council, and Rhondda Cynon Taf County Borough Council. Copies have been placed in the Library.
	The BFI reports detail a range of strengths and weaknesses in the housing benefit services provided by councils and make recommendations to improve the security and efficiency of benefit delivery.
	My right hon. Friend the Secretary of State is considering the reports and may ask the councils for proposals in response to BFI's findings.